TaxTMI 
TaxTMI 
2025 (8) TMI 1265
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....TA No.159/Bang/2010 (assessee's appeal) for the AY 2002-03 as follows: 3. Brief facts of the case which are relevant for adjudication of the Transfer pricing issue impugned in AY 2002-03 as ground number 1 are that the assessee filed its return of income with DCIT, Circle 12(1), New Delhi. Thereafter a reference was made by the AO to the ld. TPO to determine the 'arm's length price' u/s 92CA(3) of the Act in respect of 'international transactions' entered into by the assessee during the year under consideration. In response to notice u/s 92CA(2) of the Act, the AR of the assessee appeared from time to time. The documentation prescribed under Rule 10D of the Income Tax Rules was submitted before the ld. TPO. The assessee is an affiliated company of Modi Rubber Limited (MRL), Gujarat Alkalies and Chemicals Limited (GACL) and Guardian International Corporation (GI), USA and engaged in the business of manufacture and sale of float glass. The assessee has its own float glass plant near Ankleshwar. The company manufactures superior quality mirrors using automated curtain coating. During the year the assessee had a total turnover of Rs. 307.08 crores with operating profit of Rs. 65.38 ....
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.... adjustment of Rs. 2,13,89,379 in respect of international transaction of export of goods. (reference in summary calculation of TP adjustment @ pg 3-8 of Convenience compilation - TP). After the receipt of TPO order, the AO passed the assessment order and framed the assessment. 4. Aggrieved with the order of AO, assessee filed an appeal before the ld. CIT(A), who vide its order dated 27.10.2009 partly allowed the appeal of the assessee. 4.1 The CIT(A), held that CUP method can only be applied in respect of such transactions only, where the products of similar nature have been sold to unrelated parties, within the same month and same country. Accordingly, the CIT(A) held that out of total international transactions of export of glass, CUP method could only be applied in respect of four transactions amounting to Rs 47,10,329/-. The CIT(A) accordingly, restricted the adjustment made by the TPO to Rs 6,94,469/-. 5. Aggrieved by the order of ld. CIT(A), the assessee and revenue both has come up in appeal before us. The main contention of the assessee is that CUP method could not be applied for determining the ALP of the international transactions of export of float glass to the....
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.... was not known in the Indian market and conventional sheet glass was used in all the applications. Being the first entrant, the company had to develop the market for float glass. Float glass plant is an example of continuous process industry and the furnace once fired cannot be shut. If the plant is to operate at less than the optimum capacity, there would be substantial fixed cost that would still have to be incurred. Soon after the commencement of production, the assessee realized that there was excess capacity of about 40-50% in the domestic market and the assessee could sell only 40% of its production in the Indian market leading to heavy losses and cash flow problems. It is pertinent to note that the glass industry in India has been facing situation of excess capacity for several years. In this scenario, it was imperative for the company to explore the export market for sale of its products. (e) Further, the Letter of Intent (LOI) and the approval letter for foreign collaboration issued to the assessee by the Government of India, stipulated a condition that the company would export 25% of its production. Non-fulfilment of export obligation would have attracted penal p....
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....he tune of Rs. 6,94,649/- and ld. CIT(A) then came to the conclusion that the remaining transaction of Rs. 15,68,90,190/- are not falling in the criteria for CUP method and hence the assessee correctly applied TNMM as the most appropriate method with respect to the remaining transaction of Rs. 15.68 crores. Ld DR failed to point out any perversity in the order of the CIT(A). Therefore, considering the totality of the facts of the case and the judgements referred to by the ld. Counsel for the assessee as well as the CIT(A), we are of the view that there is no error in the order of ld. CIT(A) and hence we fortify the order of ld. CIT(A). 8. The next ground of appeal in AY 2002-03 in assessee's appeal is that the CIT(A) erred on facts and in law in confirming the action of the AO in computing deduction under section 80HHC of the Act by reducing an amount of Rs. 1,44,233 on account of sundry amounts written back, by erroneously applying Explanation (baa) to section 80HHC of the Act. 9. Facts as coming out from the order of ld. CIT(A) are that the assessing officer computed "profits of the business" for the purposes of computing the deduction under section 80HHC of the Act, as def....
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....hange rate fluctuation. With respect to this issue, the AO has relied upon the amendment to section 43A of the Act to hold that assessment to the value of fixed asset will only be made at the time of actual payment. The disallowance of depreciation as aforesaid was affirmed by the ld. CIT(A) in view of the amendment. 14. Ld. Counsel for the assessee relied upon the judgement in the case Woodward Governor reported in 294 ITR 451 for the proposition that the amendment brought in section 43A of the Act is prospective and applicable w.e.f. 1.4.2003. 15. Ld. D.R. could not provide any adverse ruling holding otherwise against the assessee. Finding of the Bench: 16. After considering the rival submissions, we are of the view that the authorities have erred in relying upon the provisions of section 43A of the Act, which provisions are held to be prospective by the Hon'ble Delhi High Court in the case of Woodward Governor reported in 294 ITR 451, which decision has been further affirmed by the Hon'ble Supreme Court in the case of CIT Vs. Woordward Governor reported in 312 ITR 254 (SC). Therefore, we allow this ground of appeal of the assessee. 17. The next issue in the assess....
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....e assessee appearing on behalf of the assessee vehemently thrust upon the allowability of 60% depreciation on this appliance. 23. Ld. D.R. relied upon the orders of authorities below. Finding of the Bench: 24. After considering rival submissions, we are of the view that without going into the controversy regarding the nature of these expenses, whether capital or revenue, we allow 60% depreciation on this appliance and decide accordingly. 25. The next issue is claim of assessee with respect to the sales tax incentives amounting to Rs. 13,21,05,557/-. These incentives pertain to Gujarat Unit of the assessee company. 26. Before going into the merits of this ground, it is pertinent to note certain dates which goes to the root of the matter: Date of filing Income Tax Return 30.10.2002 Date of intimation issued u/s 143(1) of the Act 27.02.2003 Date of issuance of notice u/s 148 of the Act 23.01.2004 Date of passing of order u/s 147 of the Act 30.03.2005 Date of Supreme Court order in the case of CIT vs. Ponni Sugars and Chemicals Ltd: 306 ITR 392 16.09.2008 Date of application filed before CIT(A) raising additional ground of appeal qua trea....
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....ngs of section 148 of the Act also. Ld. D.R. relied upon the judgement in the case of Sun Engineering reported in 198 ITR 297 (SC) for the proposition that assessee cannot claim a benefit under proceedings of section 148 of the Act. 30.3 After considering the rival submissions, we are of the view that the case of the assessee is squarely covered by the Hon'ble Supreme Court in the case of Sun Engineering (supra), wherein it was held as under: "26. Although s. 147 is part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that that construction should be preferred which makes the machinery workable. Since the proceedings under s. 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the "escaped income" of an assessee, the same cannot be allowed to be converted as "revisional" or "review" proceedings at the instances of the assessee, thereby making the machinery unworkable. 27. As a result of the aforesaid discussion, we find that, in proceedings under s. 147 of the Act, the ITO may bring to charge items of ....
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....5 while deciding the admissibility of a fresh claim under similar set of facts after referring to the judgement in the case of Goetz India Ltd. (supra) and the provisions of section 139(1) of the Act and 139(5) of the Act has observed as under: - 18 With regard to admissibility of claim, the ld AR submitted that the reliance placed by AO/CIT(A) on decision of Goetz (supra) is highly misplaced since SC judgment was in context of power of AO to entertain a fresh claim made otherwise than by revised return. The Supreme Court, however, made it clear that the decision in Goetze India Limited (supra) was restricted to the power of Assessing Authority to entertain a claim for deduction otherwise than by a revised return and the same, did not impinge on the power of the Tribunal u/s 254 of the Act to permit a new claim.............. 19. That apart, the ld. counsel for the assessee submitted, that the purpose of assessment is to compute the correct taxable income of the assessee as per the provisions of the Act and even if the deduction was not claimed in the return of income by the assessee, which was clearly allowable in law to the assessee, the assessing officer was dut....
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....m for the first time before the Tribunal. In the instant case, we find that the claim is firstly made before the AO who rejected the claim. The claim was further put before the CIT(A) but in vain. The claim was made in the ITAT in the normal course of appeal proceedings and therefore was not either fresh claim nor was for the first time before the ITAT. Furthermore, the allowability of claim of sales tax subsidy being capital in nature was not automatic and was in serious dispute with the Revenue. In view of this crucial factor, the decision of NTPC and Jute Corporation and Wipro Finance Ltd regarding plenary powers of ITAT u/s 254, do not apply. We are of the considered view that as the claim for exclusion of the sales tax subsidy was made for the first time before the AO, therefore, the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd squarely apply. The assessee agitated this issue before the CIT(A) in regular appeal which was adjudicated by him and rejected, hence the issue was before ITAT in normal course. In view of the above, the assessee cannot be allowed a claim without revising the return u/s 139(5) within the due date and mandatory time limits. ....
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....loss account deduction under section 80HHC of the Act computed on the basis of profit as per books of accounts instead of reducing deduction under that section computed as per provisions of the Act. 8.1 That on the facts and circumstances of the case and in law, the assessing officer ought to have allowed 100% deduction under section 80HHC of the Act in respect of export profits while computing 'book profits' in terms of clause (iv) of Explanation 1 to section 115JB of the Act, and not restricting the same to the extent specified in sub- section (1B) of the section 80HHC of the Act. 32. Facts relevant to this are that for the relevant assessment year, the assessee had filed its return of income declaring Nil income under normal provisions of the Act and Rs. 34,37,36,599/- under section 115JB of the Act. Accordingly, the assessee paid tax on the deemed income in accordance with provisions of section 115JB of the Act. In the return of income, the assessee inadvertently made reduction under clause (iv) of Explanation 1 to section 115JB to the extent of the limits specified in sub-section (1B) of section 80HHC of the Act viz. 70% of export profits, under misconception of la....
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.... 89 ITD 457 (Mum-Tri) - Garware Polyester Ltd vs ACIT:143 ITD 87 (Mum-Tri) - M/s Bonfiglioli Transmissions Pvt. Ltd. v ACIT: ITA No.457Mds/2007 (Chen) - ACIT vs Varinder Agro Chemicals Ltd: 161 Taxman 134 (Chd)(Mag) 33.2 In addition to the above, Mr Vohra ld Sr Counsel further submitted that the book profits under section 115JB of the Act should be computed with reference to adjusted book profits and not the taxable profits computed under the normal provisions of the Act. 34. Ld. D.R. relied on the orders of the authorities below. Finding of the Bench: - 35. After considering the rival submissions we observe that Special Bench of the Tribunal in the case of ACIT vs. Ashima Syntex Ltd: 117 ITD 1 (ALT) (SB), following the decision of other Special Bench of the Tribunal at Bombay in the case of DCIT v. Synchrome Formulations (I) Ltd: (supra), has held that deduction under section 80HHC of the Act is to be computed with reference to the profit as per books of accounts and not as per provisions of 115JB of the Act. The aforesaid decision in the case of Syncome Formulations (supra) too, has been upheld by the Hon'ble Supreme Court in the case of CIT....
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.... 3215/Del/2013 vide order dated 22.8.2014 for the AYs 2007-08 & 2008-09, wherein the coordinate bench of this Tribunal in paras 43 & 44 has discussed this issue and after referring to the judgement of Hon'ble Delhi High Court in the case of Asahi India Safety Glass Ltd. reported in 346 ITR 329 and CIT Vs. Amway India reported in 346 ITR 341 has held that the expenses incurred by the assessee on account of software license purchase and development of other miscellaneous software and maintenance of web sites are revenue in nature. Respectfully following the verdict of the coordinate bench, we dismiss the appeal of the revenue and sustain the order of ld. CIT(A). ITA No.159/Del/2010 (AY 2003-04) (Assessee's Appeal): 39. The present appeal of the assessee is arising from the order of ld. CIT(A) dated 11.11.2009 and relates to assessment year 2003-04. In this appeal, the assessee has raised total 5 grounds of appeal. 40. Ground Nos.1 & 2 are further divided into sub-grounds. 40.1. In ground Nos.1 to 1.4, the assessee has challenged the addition of Rs. 1,52,392/- on account of adjustments made by the TPO in respect of international transactions entered into by the assessee. ....
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....s. 5,40,74,511 was converted into fixed asset and depreciation was charged on the same. The facts in this regard are explained as under: 46.2 The float glass manufacturing process consists of: (a) receiving raw materials (silica sand, soda ash, limestone, dolomite etc.), mixing them in the Batch House and conveying the same to furnace; (b) melting of raw materials in the Furnace using natural gas as fuel; (c) glass ribbon formation in Tin Bath; (d) controlled cooling of glass in Annealing Lehr; and (e) computer controlled automatic cutting. 46.3 In Tin Bath section, molten glass from the furnace would flow by gravity where a continuous ribbon would be formed by controlling glass temperature with time. Tin Bath section is filled with about 200 MT of molten tin. The glass ribbon is pulled through the bath on a layer of molten tin, the temperature of which is controlled electrically. In this section the molten glass floats across the surface of the molten tin, which then absorbs sufficient heat from the glass to enable it to begin forming cohesive and continuous sheet or 'ribbon' of glass. The glass produced through this process is ca....
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.... to be inventory as per AS-2. Instead, it satisfies the definition of 'Fixed Asset' as per Accounting Standard-10 given as under: "6.l Fixed asset is an asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business." 46.10 The Company was also advised by legal consultants that the float glass plants are treating Tin in Tin-Bath as depreciable asset. Therefore, Tin in Tin-bath was retrospectively reclassified as depreciable asset. Accordingly, the appellant during the relevant previous year, charged in the books of accounts depreciation on 'Tin used in Tin-bath' for the earlier years amounting to Rs. 2,55,61,332. 46.11 The AO made disallowance of Rs. 5,40,74,511 being the amount of Tin used in Tinbath treating the same as fixed asset instead of closing stock. It is pertinent to mention here that prior to this assessment year, the assessee was treating this item of Tin as part of inventory. However, in the impugned year, the assessee changed the accounting method and transferred this inventory to the block of fixed assets. The AO could not accept the method of the assess....
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....e case of Apollo Tyres (supra) and the other judgements relied upon by the assessee in its synopsis. Ld. AO will grant meaningful opportunity to the assessee to decide before taking a view on this issue. 51. In ground No.4, the assessee has challenged the action of ld. CIT(A) with respect to claim of assessee on sales tax incentives amounting to Rs. 13,47,84,407/- and also incentives pertaining to purchase of goods amounting to Rs. 6,75,66,563/-. Finding of the Bench 52. At the outset, we observe that the ld. CIT(A) has dismissed this ground solely relying upon the judgement in the case of Goetz India Ltd. reported in 284 ITR 323. 53. So far as the action of the ld. CIT(A) in not entertaining the claim of the assessee by way of additional ground, and reliance upon the Goetz India Ltd. (supra), we have already decided that the judgement in the cases of Goetz India Ltd. (supra) does not impinge upon the powers of ld. CIT(A), therefore, we hold that the ld. CIT(A) has erred in discarding the claim of the assessee, sitting as an appellate authority. So far as the issue whether the assessee is entitled to sales tax incentive is concerned, we will deal with this issue in appe....
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....ubsequently, the IDBI bank vide its letter dated 20.9.1999 allowed the assessee to make the payment of royalty and hence the assessee started paying the royalty in instalment from financial year 2001-02 onwards. The AO disallowed this payment on the ground that these are prior period expenses. 60. The ld. CIT(A) deleted the addition after examining the accounts of the assessee and all the other details. Finding of the Bench 61. After considering the rival submissions, we are of the view that this issue requires fresh consideration at the end of AO. The AO will examine this issue afresh in the light of judgements as well as facts submitted before us. In case the assessee is able to demonstrate with the documentary evidences that these expenses were actually crystalized in this year, then the AO is duty bound to allow these expenses. With these observations, we restore this issue to the file of AO. 62. So far as the issue of deletion of Tin used in Tinbath, we have also decided this issue in assessee's appeal in ITA No.159/Del/2010 for the AY 2003-04 and has restored the matter to the AO. Our findings given in that order would mutatis mutandis apply here also. ITA No.4....
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.... it appropriate to discuss the facts relatable to this issue in this portion of the order. The assessee had set up the plant in the backward area at Village Kondh (Taluka Valia), District Bharuch, Gujarat. As per the Sales-tax Incentive Scheme applicable to a "Pioneer Unit" in a backward area of the State of Gujarat, the appellant was given incentive by way of complete exemption from payment of sales tax on sale of goods (Sales-tax subsidy) and in respect of purchase of raw materials, processing materials, consumable stores or packing materials, etc. a concessional rate of tax @ 0.25% (Purchase-tax incentive) was fixed. Based on the Gujarat Government Resolutions, it may be noted that the objective of the State Government was to accelerate industrialization in the backward regions in the State of Gujarat. With this objective, the Government offered certain incentives to new units to be set up in the backward regions. 71. It is the claim of the assessee that sale tax exemption was linked to eligible fixed capital investment as defined under the relevant scheme of Gujarat government. It is also an admitted fact that the assessee has received first professional eligibility certific....
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....grieved with the order of AO, assessee filed appeal before the ld. CIT(A) who also affirmed the view of the AO after distinguishing all the case laws relied upon by the assessee. The findings of the ld. CIT(A) are there in its order at page 12 para 10 and the final discussion in para 10.1 at page 13, which are reproduced below: 73. Aggrieved with the order of ld. CIT(A), the assessee has come up in appeal before us. Ld. Counsel for the assessee vehemently argued that the ld. CIT(A) has erred in not adjudicating this issue on merits, rather simply relying upon the judgement in the case of Goetz India Ltd. (supra). Besides this, ld. Counsel for the assessee also relied upon the synopsis filed with the bench and the main thrust of the counsel is that the sales tax incentives were linked with the deployment of the capital by the assessee and hence as per the jurisprudence of purposive interpretation, the assessee is entitled for the relief. In simple words, the main contention of the assessee is that taxability of subsidy by whatever name called is to be determined by the purpose for which the subsidy is granted and not the form/mode/manner in which the subsidy is received. 74. L....
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........................................... (1) Sales Tax Exemption Category of area Quantum Time limit 1 2 3 A 90% of the fixed capital investment For a period of 14 years from the date of commencement of commercial production B 70% of the fixed capital investment or/Rs.2.5 crores whichever is less For a period of 12 years from the date of commencement of commercial production (2) Sales Tax Deferment A 90% of the fixed capital investment For a period of 14 years from the date of commencement of commercial production B 65% of the fixed capital investment or/Rs.2.00 crores whichever is less For a period of 12 years from the date of commencement of commercial production. Note - (1) If a unit reaches admissible amount stated in Col.2 above before the expiry of the time limit mentioned in co. 3 above, it will not be eligible for incentives thereafter. (2) In respect of sales tax deferment, the amount so deferred will be recovered in six equal annual instalments after the expiry of the time limit mentioned above. No interest will be charged on the amount so allowed to be deferred. 9. Procedure for c....
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....s are exclusive and carries different meanings, as discussed by us in below para(s). 78. Now we discuss the case laws as relied upon by both the parties. 79. First of all we will discuss the case law of CIT Vs. Ponni Sugars & Chemicals Ltd. reported in 306 ITR 392 on which both the parties i.e. AO and the assessee are relying. Perusal of this decision would say that Hon'ble Supreme Court has observed a peculiar fact i.e. in that case, the "incentives" given were to be utilized for repayment of the loans taken by the assessee to set up the new unit, which is not the case here, therefore, the reliance of the assessee on Ponni Sugars (supra) is of no relevance. It is an admitted position of fact that the assessee has already claimed this amount as income in its profit & loss account and has not utilized this amount for repayment of loan or for acquisition of some assets. Therefore, in our view, the AO is correct in relying upon the judgement of Ponni Sugars (supra) and decide the issue against the assessee. The relevant observations of their lordship in the case of Ponni Sugar as reproduced hereunder: - "the character of the receipt in the hands of the assessee has to b....
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....the commencement of production. For the sake of convenience, we would like to reproduce the relevant paragraphs of the coordinate bench, distinguishing the term "subsidy" from "incentive" as follows: "35. The Tribunal, while making comparison of the Andhra Pradesh Scheme under Government Order MS No. 455 dated 3rd May 1971, with Maharashtra Scheme sanctioned by the Government of Maharashtra vide Resolution No. IDL-7079/(2043)-IND-8 dated 5th January, 1980, laid stress on the form, not on the substance of the Scheme. The quantum of incentive or the period of eligibility is not a determining factor to decide whether the incentive given is of the nature of subsidy. True purport of the Scheme should be spelt out. What is subsidy? That is discussed by the Hon'ble Calcutta High Court in the case of Sarda Plywood Industries Ltd. v. CIT [1999] 238 ITR 354, 368. The relevant portion is reproduced here as under :- "In Kesoram Industries' case [1991] 191 ITR 518(Cal.), the meaning of the word "subsidy" had been considered in great detail which is to the following effect; (page 529) Webster's New World Dictionary, 1962: 'a grant of money, specifically (a) (b) a gover....
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.... was only an incentive. Incentive is different from subsidy. In Random House Encyclopedia Dictionary, the word "incentive" is defined as something that incite to action. In the Concise Oxford Dictionary the word "incentive" is defined as tending to incite, incitement (to action, to do, to doing), payment or concession to stimulate greater output by workers. We have considered the various clauses of the Scheme. In our opinion, exemption from sales tax was only a concession. It cannot be equated with subsidy." 82. Thereafter, we would also like to reproduce the relevant observation of the coordinate bench in the case of Baja Auto(Supra) deciding the nature of receipt: "41. The decision of the Apex Court rendered in the case of CIT v. P.J. Chemicals Ltd. [1994] 210 ITR 8305, 841 ruled that where the Government subsidy is an incentive not for the specific purpose of meeting a portion of the cost of the assets though quantified as or geared to a percentage of such cost, it does not partake of the character of a payment intended either directly or indirectly to meet the actual cost. The question posed before the Apex Court was whether subsidy reduces the actual cost or not. T....
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.... the Collector i.e. assessee could retain the amount so collected undoubtedly to achieve that large goal of industrial utilization. The achievement of a quantitative limit would mean that the incentives would not be available if the assessee would not be able reach the targeted sales. Hon'ble High Court in para 25 & 26 has held that since the incentives/subsidy were given after the setting up of the unit and the assessee was free to utilize the funds in any manner, the sales tax receipts are revenue receipts. The relevant observation of the Hon'ble High Court are reproduced as under: "25. In the present case, the provisions of the original scheme (i.e. the original policy of 1990) and its subsidy scheme are relevant; they have quite correctly been relied upon by the revenue. Paras 6 (A) and 6(B) of that scheme specifically provided for capital subsidy to set up prestige units; the amounts indicated (Rupees fifteen lakhs) were to be towards capital expenditure. Now, if that was the scheme under which the assessees set-up their units, undoubtedly it contained specific provisions that enabled capital subsidies. Whether the assessees were entitled to it, or not, is not relevan....
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....s been added by the AO u/s 41(1) of the Act on the ground that the assessee has failed to establish that these sundry creditors, which are appearing in the books of the assessee from last more than 3 years are still alive. The main reason of the disallowance as observed by the AO is that the assessee could not produce any confirmation to indicate that these liabilities were enforceable by the creditors and hence it is a case of cessation of liability. 86. The ld. CIT(A) has also affirmed this addition on the ground that the assessee could not be able to furnish the relevant documentary evidences and has not seriously contested this issue in the appellate proceedings. The ld. CIT(A) observed that the assessee vide its letter dated 4.5.2016 has categorically stated that there is no correspondence for writing back these static creditors available with the assessee. Finding of the Bench:- 87. Before us also, the assessee has not contested this issue. However, we restore this issue to the file of AO to examine as to whether the assessee has written back these balances in assessment years 2009-10 & 2010-11, if yes, then corresponding benefit should be given to the assessee. 8....
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....y. During the course of assessment proceedings, the AO disallowed these expenses on the ground that the assessee failed to provide any evidence with respect to the nature of these expenses. Meaning thereby, the assessee has produced the relevant bills and other information, however, could not be able to substantiate the nature of expenses incurred by the assessee for the purpose of its business. Before ld. CIT(A) the assessee has explained the nature of these expenses up to some extent. However, the ld. CIT(A) affirmed the view of the AO and disallowed these expenses. 94. Counsel for the assessee before us reiterated the submissions made before the lower authorities and also argued that similar expenses were allowed in previous and subsequent years. 95. Ld. D.R. relied upon the orders of authorities below. Finding of the Bench:- 96. After considering the rival submissions, we observe that principle of res judicata are not applicable to tax proceedings and each assessment year is a separate unit, and has to be decided in accordance with the facts relevant for that year. Therefore, for this assessment year, the burden is on assessee to prove with cogent evidence, the natu....
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....so far as the assessment in question is concerned since the assessee has miserably failed to substantiate the claim, we feel that first appellate authority ought not to have inferred with the assessment order." There are so many other judgements also including of Delhi High Court in the case of Meera Kulkarni Vs. CIT reported in 2011-TIOL-859-High Court- Delhi, wherein the Hon'ble High Court has also laid down that "burden is on assessee to prove the nature of the expenses 97. So far as the expenses incurred with S.R. Batliboy & Company, we allow the expenses because the assessee is able to establish the nature of these expenses. Therefore, this ground of the assessee is partly allowed. 98. In ground No.5, the assessee has challenged the disallowances of commission payment made to Gujarat Guardian International, USA. By invoking the provisions of section 40(a)(i) of the Act in respect of this issue the AO observed that the assessee has made payments without deducting the TDS and hence the payments of commission are not allowable to the assessee. The AO was of the view that the export commission paid by the assessee is in the nature of FTS and hence the assessee ought to have ....
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....-07) (Assessee's appeal) (DRP route):- Now we adjudicate assessee's appeal in ITA No.5358/Del/2010 for the AY 2006-07 as follows: 105. Present appeal of the assessee is arising from the order f ld. AO dated 27.9.2010 and it relates to assessment year 2006-07. 106. Brief facts of the case are that the assessee has filed its return of income declaring substantial income of Rs. 114.11 crores on 15.12.2006. The return of income filed by the assessee was processed u/s 143(1) of the Act on 30.3.2008. Thereafter, the assessee filed one revised return reflecting lesser income of Rs. 113.14 crores. The revised return so filed by the assessee was processed on 30.3.2009 and thereafter the case of the assessee was picked up for scrutiny. Since international transactions were involved in this case, a reference was made to the ld. TPO. After receiving the TPO order, the AO passed draft assessment order on 24.11.2009 and against which the assessee filed objections before the ld. DRP. The ld. DRP vide its order dated 25.8.2010 after making certain modifications affirmed the draft order. Thereafter, the AO passed the impugned order. 107. Aggrieved with the order of assessment, assessee ....
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....4A of the Act is not warranted in these facts. We further observe that the AO has wrongly invoked the provisions of rule 8D. Further the assessee is a debt free company, which fact has not been refuted by the DR therefore, it cannot be presumed that any indirect expenses such as interest on capital would have been incurred by the assessee while making investments in Mutual funds. A reference can be made to the judgement of Hon'ble Supreme Court in the case of CIT Vs. Gujarat Stat Fertilizers reported in 409 ITR 378. In this judgement, it is held that where sufficient interest free funds are available for making investments, no disallowance can be made u/s 14A of the Act. Before parting, we would further like to observe that provisions of Rule 8D are prospective as held by Hon'ble Supreme Court in the case of CIT Vs. S.R. Technology reported in 401 ITR 445(SC). Therefore, we allow this ground of appeal of the assessee. 117. Ground No.4 of the assessee's appeal is related to the addition of Rs. 1,29,275/- on account of cessation of liability. 118. The ld. AO observed that these creditors remain static in the books of assessee for more than 3 years. Observing this, the AO added ....
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....xpenses as capital and allowing deprecation on them made an addition of Rs 1,02,56,677/- 129. Facts relatable to these expenses are like that during the year assessee incurred an amount of Rs. 18,39,516/- on horticulture expenses of its industry. The industry of the assessee is located in a remote area having dusty environment and in order to build a ground landscaping and pollution free environment, the assessee has incurred these expenses. However, the AO took a view that these expenses provided benefits of enduring nature and hence the same are capital in nature. The ld. DRP affirmed the view of the AO. 130. Before us, ld. Counsel for the assessee at the outset pointed out that in assessee's own case in ITA No.3686/Del/2013 for AY 2008-09, the coordinate bench of the Tribunal has already allowed the expenses related to horticulture. 131. Ld DR relied on the orders of the authorities below. Finding of the Bench:- 132- After considering the rival submissions and perusing the order of the coordinate Bench in assessee's own case in the ITA number 3686/D/2013, we allow this ground of the assessee. 133. Next disallowance by the AO is wind power expenses. It is the cl....
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.... 146. Ld. D.R. relied upon the orders of the authorities below. Finding of the Bench:- 147. After considering the rival submissions, we observe that the impugned expenses were subject to FBT and therefore, we are of the considered opinion that no disallowance can be made with respect to these expenses. 148. It is further worthy to note that in assessee's own case for AY 2007-08 in ITA No.3214/Del/2013, the coordinate bench has already decided this issue in favour of the assessee. Therefore, we allow these expenses. 149. In ground Nos.7.10 & 7.11 the assessee has challenged the action of the AO with respect to the disallowance of payments made by assessee towards charity and claimed deduction u/s 80G of the Act. 150. the ld. AO disallowed the claim of the assessee u/s 80G of the Act by observing that assessee could not file any evidence in support of the claim u/s 80G of the Act. The ld. DRP confirmed the view of the AO. 151. Ld. A.R. reiterated the submissions made before the lower authorities. So far as the addition of Rs. 4 lakhs out of the amount of Rs. 14 lakhs, it is observed that the assessee has incurred only Rs. 10,44,518/- as actual amount and inadvert....
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....basis of special bench decision in the case of Reliance Industry Ltd. 88 ITO 273 and on the decision of Supreme Court in the case of CIT Vs. Ponni Sugars & Chemical Ltd. I have considered the assessee's claim and find it not maintainable because of following reasons: . the claim was not made in the original return and neither the assessee filed any revised return u/s 139(5) of the Income Tax Act. In the case of Goetze India Goetze (India) Ltd. v. Commissioner of Income- tax, 284 ITR 323 wherein the Hon'ble Supreme Court held It is possible for an assessee to claim relief, which he had omitted to claim in the return of income by filing a revised return, if it is in time. Where he had failed to file such revised return in time, he cannot circumvent the requirement by merely filing a letter asking for relief. Therefore the assessee's claim is not maintainable on the technical basis itself. . Coming to the merits, the nature of subsidy as to whether it is capital or revenue has been vexed question with various decisions of different courts and Tribunals some holding it revenue others as capital. The nature of subsidy as to whether it is capital or revenue will depend upon the pur....
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....e scheme was not a supplement the profits made by industries. In that view of the matter, the High Court held that the subsidies given under the said scheme by the Government to newly set up industries were capital hifcelpts in the hands of the industries and could not be taxed as revenue receipts. In that case, 75 per cent of the sales tax paid in a year for a period of five years from the date of starting of production was to be given back by the Government to the industry concerned. The High Court was of the view that obviously the subsidy was given by way of an incentive for capital Investment and not by way of addition to the profits of the assessee as was clear from the facts and circumstances of the case. The Madhya Pradesh High Court, however, failed to notice the significant fact that under the scheme framed by the Government, no subsidy was given until the time production was actually commenced. Mere setting up of the industry did not qualify an industrialist for getting any subsidy. The subsidy was given as help not for the setting up of the industry which was already there but as an assistance after the industry commenced production. The view taken by the Madhya Pradesh....
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....ital in nature as the assessee was obliged to utilize the subsidy only for repayment of term loans under taken by the assessee for setting up new units/expansion of existing business. Therefore, this latest decision of Hon'ble Supreme Court while approving the ratio of its earlier decision in the case of Sahney Steel and Press Works Ltd. (supra) have clearly indicated that subsidy can be capital if it has obligation on the part of recipient to utilize it either to expand its capital structure or towards acquisition of the same or repayment of its capital liability only. If there is no such stipulation and assessee is free to use the money in its business entirely as it liked it will be revenue in nature. Applying the tests laid down in the two leading decisions of Hon'ble Supreme Court as discussed above following facts emerge in this case also: i) The sales tax incentive given to the assessee is only after commencement of production and that too within specified date. il) The assessee is under no stipulation to apply the amount of incentive towards repayment of capital cost [as was case in Ponni Sugar & Chemicals Ltd.] and is free to utilize it. il) The nature of as....
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....or pioneer units-1985." 5. Operative period .- This scheme shall come into operation with efect from Ist April, 1965 and shall remain in foto: for a period of 5 years upto 3ist diarek, 1991. 4. Applicability of the Scheme. - This scheme will be applicable in the areas mocationed in Acnesure . A. to tais Resolution. 5. Definitions. - (s) "New Industrial Unit" means an industrial unit which commences commercial Produceon ster ist April, 1986 (b) "Previous Scheme" means special incentives for pioneer units announced ride GR No. INC. 1800-1766-PD, dated 27th August, 1980 as amended xsl clarified by various Resolutionai circular from time to time: (c) "Eligible fixed capital investment" meats investment in"- -land : the actual price paid for the land to the extent needed but excluding land developinent charges, -new.building -new plant and machinery and imported second hand machinery and installation expenditure capitalised for plant and machinery. -capitaliol interest during construction not exceeding 5% of the total fixed enpital investment -technical know-how lees or drawing fees paid in lump sum to foreign collaborators or foreign suppliers as approved ....
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.... grant of status of a pioneer unit. (i) The unit have aball fixed capital investment atleast of The. 3 crores (Papers three crores). (i) The unit shall employ atleast 100 workers on a permanent basis. (iii) Only one unit per village in the eligible ares will be givea pioneer status. (ir) A new industrial unit will not be eligible for the grant of pioneer status if it is set up in a taluka where 10 or more units having such investment have already been set up prior to the date of the registration for pioneer status. Units involving fixed capital investment of Rs. 3 crores and above, already set up before the opera. tive period of the scheme will also be counted for the maximum number of 10 units per taluka and one wait per village (v) Those anita which have been granted final registration under the previous schema or have sveiled of the pioneer localits under previous scheme will not be eligible for the special incentive woder this scheme .. . (vi) These units which have already commenced production before in: April, 1950 will iso not be eligible for the incentive under this scheme. (vii) Pioneer benefit will not be available for expansion of diversification.....